Unlike Monetary Policy which subsidized the accumulation of debt by ALL constituents, Fiscal Policy has specifically elevated Federal Government debt to now out-of-control levels.
The (Other) Biggest Lie Ever Sold
The biggest lies are never the conspiracies or the ones no one know about. The biggest lies are the ones squarely in front of our face that no one wants to acknowledge. The 800 lb elephant in the room.
In this case, the biggest lie is that the economy is in recovery when in fact it's still in a major recession.
The fucked up logic of the day is that no matter how much money the government borrows, as long as the economy is growing sequentially, then we must be in recovery. This ignoring of the deficit logic puts Spinal Tap's "This one goes to 11" seem intelligent by comparison. Yet somehow almost every economist, financial pundit and politician is onboard with pretending that the economy is out of recession and recovering.
Put it this way, if the Federal Government was an average person, it would be a guy who lost a well paying job of say $75k a year. He now has a part-time job paying $25k a year and has worked his way through his life savings and retirement savings. He tells himself that he can catch back up on his retirement savings later, even though he is already 58. Having worked through his savings, he now props up his lifestyle back to previous levels by tapping a line of credit on his home. Yet, like the Fed, when people ask about his job situation, he tells them he has a new job and has "recovered" from his setback, albeit he is behind on his savings...
Obviously any honest depiction of a recovery would adjust for increased borrowings, yet not one economist of note seems to make this simplistic calculation.
The numbers are frightening:
GDP for 2008, the year the recession started was: $14.27 trillion
GDP for 2009, was $14.01 trillion indicating the year-over-year recession
GDP for 2010 was back up to $14.55 trillion, giving everyone the false comfort that the economy was recovering, because GDP in 2010 was now $281 billion higher than 2008. That is the standard story that is propagated to the masses.
But the key (missing) question is what happened to the deficit (borrowing) during those 3 years?
The deficit in 2008 was $458 billion
By 2010, the deficit was at $1,455 billion
Therefore, even though GDP was $281 billion higher in 2010 than 2008, net new borrowings had increased by $997 billion ! i.e. if not for new borrowing, 2010 GDP would have been $13.55 trillion (assuming 1:1 multiplier), which is 6.8% lower than the reported amount. That's the new math baby, just borrow your way to prosperity !!!
Meanwhile, these figures don't take into account inflation over those two years, which further deflates these figures by roughly 4% over those two years.
Lastly, adjust for immigration, because the U.S. had almost 5 million more people in 2010 than in 2008, so adjusted for the number of people, and GDP is further reduced.
Wow, what a great recovery. To think that we pay these idiots to lie to us constantly. Which came first, them lying to us, or us needing to be lied to? One begins to wonder...
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FWIW, I still like Treasury bonds (invest at your own risk) as the ultimate safe haven, not withstanding these massive deficits. I own them knowing that the Federal Reserve will always come along and buy them from me in some future iteration of QE "n". And when that inevitable moment comes and we are staring into the economic abyss, the streets en fuego - there will be nary a Tea Partyer to stand in the way.
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FWIW, I still like Treasury bonds (invest at your own risk) as the ultimate safe haven, not withstanding these massive deficits. I own them knowing that the Federal Reserve will always come along and buy them from me in some future iteration of QE "n". And when that inevitable moment comes and we are staring into the economic abyss, the streets en fuego - there will be nary a Tea Partyer to stand in the way.
